Accelerators can jump-start your business

Just make sure you're not giving up too much

Jun. 21, 2013 - 04:11PM
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The classic image of the would-be entrepreneur hoping to launch the next Apple or Google is someone working on a fledgling enterprise in a garage or dorm room.

But working from home can be awfully lonely, and if Mom, the kids or hubby keep interrupting, it’s hard to create the next big thing.

Now entrepreneurs have an alternative — spaces dedicated just for early-stage and novice small-business owners. While these launch spaces are exploding in tech-heavy places such as Silicon Valley and New York, co-working, entrepreneur-friendly office spaces are popping up across America.

RocketSpace is one of the premiere entrepreneurial accelerators.

Founded two years ago by tech entrepreneur Duncan Logan, RocketSpace, which calls itself an open innovation campus, quickly has become the location of choice for entrepreneurs launching high-growth technology companies in the Bay Area.

“There’s a cluster dynamic, the serendipity of hanging around people who are doing exciting things,” said Logan, describing the vibrant atmosphere at RocketSpace. In a large all-glass conference room that appeared to be floating in the air, a major corporation was meeting with some RocketSpace occupants while others were working individually or in groups at long tables scattered around the two floors of space.

RocketSpace houses about 135 companies with 600 people, according to Logan. They’re all in tech fields and all have gone through a rigorous selection process.

“We get around 25 applicants a week from all around the world,” Logan said. They have to have raised at least one round of financing and have the potential to grow quickly.

“We provide three core things,” Logan said:

Access to capital with relationships with top venture capital firms.

Access to talent including relationships with top schools such as Stanford University near Palo Alto, Calif., and Kellogg School of Management at Chicago’s Northwestern University.

In fact, RocketSpace has become such a center for entrepreneurs launching the next big thing that a number of major corporations have taken desks there, so their employees can mingle daily with innovators.

Shared working options

RocketSpace is considered an accelerator. It helps to understand the types of shared working options for new businesses, keeping in mind these definitions are not strict.

Incubators for early stage and pre-launch companies. Typically, high competition to be accepted. They charge no out-of-pocket rent. In fact, expect to receive money and hands-on guidance as well as space in return for equity in your company. This equity costs dearly in the long run, so make sure you work with people who have a proven track record of success.

Accelerators for high-growth companies after the incubation stage. The best accelerators, such as RocketSpace, help high-potential companies grow quickly through introductions to customers, financiers or key employees. They may charge rent and/or take equity. True accelerators are highly selective.

Co-working spaces that consist of straight-forward, turn-key rental space. You get a desk — either assigned or drop-in — Internet access, conference rooms included or for an extra fee, and often some kind of coffee service or even a cafe. You do not give up equity, and no lease typically is required. They are not very selective.

Hacker houses or sort of residential hostels for techies with a partylike atmosphere for coders, who are typically young, male and often foreign. They often are incredibly expensive, upwards of $1,500 a month for a bunk bed in a room shared with two, three or four others. Operators may claim to be accelerators providing training or introductions, but they generally make their money on rent.

Right now, would-be entrepreneurs are themselves a lucrative market, and opportunists have moved in to exploit their desire for exciting work environments and their need for short-term, small space.

So be careful when considering these spaces, especially residential spaces for foreigners. Make sure the costs are fair for what you receive, and don’t give ownership in your company away without significant reward.

“Be very careful giving away equity,” Logan said. “Don’t give up equity until they prove their value. Just being in a room surrounded by other people is great, but you don’t have to give away 10 percent of your company for that.”